The Costco deal with the Freeport franchise stores was announced Friday morning and will bring the retailer’s online sales to an estimated 1.7 million customers.
With its online presence, Costco will be able to increase its revenue and profit from its stores, which account for about 8 per cent of the Canadian grocery business.
The Freeport deal is the second big acquisition in recent months by Costco.
Last year, it agreed to buy the Canadian chain’s online presence for $3.5 billion.
“With this acquisition, we’re opening up our store network to a much larger audience, allowing us to expand our online presence,” Costco CEO Jim Coppola said in a statement Friday.
“With Freeport, we’ve opened up an opportunity to expand that network and become more efficient.”
Freeport is a new name to Costco’s business, which is focused on selling merchandise to customers in the United States.
The company has stores in Michigan, Ohio and Illinois.
In the U.S., the Costco brand has been steadily declining since the late 2000s.
It now has only 8.5 per cent market share.
Freeport said in its statement that the company expects the new Freeport online sales will be profitable, with sales to customers expected to rise by 15 per cent over the next three years.
Freeport has been making inroads in the U:S.
in recent years, becoming one of the country’s top-selling retailers for groceries and apparel in 2015.
The new Costco deal comes as other retailers have been looking to take advantage of the digital trend by opening stores in other countries, including China and India.